A hospital is analyzing its overhead costs. It is not clear whether the number of patient days or nursing hours would be the best cost driver to use in predicting the hospitals overhead. The latest information on the hospital is as follows:

Month Hospital Nursing No. of Overhead Overhead Cost

Overhead Hours Patient Cost Per Per Patient

Costs Days Nursing Hr. Day

January $700,000 34,250 5,550 $20.43 $126.13

February $799,000 37,250 6,500 $21.44 $122.92

March $617,000 29,150 6,375 $21.17 $96.78

April $691,000 32,100 5,020 $21.53 $137.65

May $860,000 47,150 8,400 $18.23 $102.38

June $666,600 30,500 4,900 $21.86 $136.04

Q7. Which regression analysis (using nursing hours or patient days as the cost driver) produces the best cost equation?Explain your answer.